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Gibraltar Looks to Enhance Its Regulations For Digital Asset Exchanges

At a time when digital assets have been criticised by financial authorities in the UK and Europe, Gibraltar is outlining appropriate market standards for exchanges operating in the digital asset space.

Gibraltar is keen to raise its profile as a well-regulated commercial centre in the areas of financial services, digital technology innovation and online gaming. Its plans include updating its already regulated digital ledger technology (DLT) framework with the development of a ‘10th Core Principle’, specifically for digital asset exchanges.

Back in January 2018, Gibraltar became the first jurisdiction globally to introduce legislation around DLT with a working group of industry leaders in the blockchain and emerging tech space assembled to develop Gibraltar’s bespoke offering.

The group’s Gibraltar Market Integrity Study will not only be responsible for setting market standards for exchanges operating in the digital asset space but will also decide if the nature of the asset/item traded (i.e. security, utility or exchange tokens) affects market integrity standards. It will also take into account the recently defined standards by the UK, EU and other international bodies.

Additionally, the framework looks to help those who have the ability to create crucial foundational concepts for the work of other watchdog and/or regulatory bodies, such as the Financial Action Task Force (FATF), European Commission and the International Organisation of Securities Commissions (IOSCO).

In 2020, the IOSCO published standards for trading platforms and the European Union published proposed comprehensive regulations for the digital asset space in markets in crypto-asset regulations (MiCAR).

According to Gibraltar, its amended legislation will be the first set of legislated principles to ensure digital exchanges/operators protect customers/market integrity by looking to ensure guidance of efficiency, transparency and an orderly market.

Joey Garcia, partner at international law firm ISOLAS LLP, board member of Xapo and IOV Labs (RSK) groups and a key member of the working group, said: “The creation of the Market Integrity working group is an important step for the jurisdiction as we continue to develop our DLT framework in line with an ever-evolving regulatory landscape, and also for the Global Blockchain Convergence.

“Gibraltar has long been a leader when it comes to fostering innovation and in the development of virtual asset service providers’ regulatory standards and we are confident the 10th Core Principle will aid us even further in our mission to achieve this, particularly as the integrity of these markets is such a key focus internationally. We already have some of the largest groups in the world regulated in Gibraltar and this should continue to place those groups at the forefront of standard setting in the industry.”

Meanwhile, Pawel Kuskowski, CEO of Coinfirm and another group member, said: “Digital asset exchanges are a focal point in how public perception views cryptocurrency and blockchain systems, for better or worse. New entry retail customers, investors and traders need to be better protected and it is high time that exchanges take care of all stakeholders in the ecosystem. However, the 10th Core Principle regulation should not stifle innovation.”

Author

  • Claire works across print and online as Editor for The Fintech Times.

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